1. The Bing Company's preferred stock pays a constant $2 annual dividend in quarterly installments. What is the stock’s price if the annual discount rate (required return) is 15% with quarterly compounding? Assume the next dividend is to be paid in exactly three months.
2. Bright Industry plans to issue 7year zero-coupon bonds to finance the construction of a new $1 million office building. The company will issue the bonds at a 10% discount (EAR) and with a $1,000 face value. How many bonds must NuTech issue to finance the building?